Efficient Utilisation of Resources: PepsiCo's Sustainable Strategy

PepsiCo is a company that has incorporated sustainability into its operations and strategies. The latest innovation by PepsiCo is the plant-based bottle, which reduces environmental impact. The company has also implemented the 5 R's (recycle, reuse, renewable resources, removal of environmentally sensitive materials, and reusable packaging) to minimize its business operations' effect on society. Additionally, PepsiCo has achieved a competitive advantage through its cost leadership and differentiation strategies, robust distribution channels, and product diversification. The company has also taken care of various stakeholders such as consumers, employees, community, and environment.

Marketing management

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Contents
Introduction................................................................................................................................3
Company Overview...................................................................................................................5
Mission...................................................................................................................................5
Vision.....................................................................................................................................5
Philosophy..............................................................................................................................5
Differentiation and Competitive Advantage..............................................................................5
Differentiation........................................................................................................................6
Cost Leadership......................................................................................................................6
Distribution channels..............................................................................................................6
Commoditisation and Total Product and Solution Offering......................................................7
Commoditization....................................................................................................................7
Total Product Offering...........................................................................................................7
Branding.....................................................................................................................................8
Brand Positioning...................................................................................................................8
Consistency.............................................................................................................................8
Product Portfolio....................................................................................................................8
Inside Branding......................................................................................................................8
Sustainable Marketing............................................................................................................9
Monitoring Programs..............................................................................................................9
Benefits desired by the consumers.........................................................................................9
Pricing.....................................................................................................................................9
Wide range of marketing activities.........................................................................................9
4 Ps and Cs...............................................................................................................................10
Marketing Mix......................................................................................................................10
Product..............................................................................................................................10
Price..................................................................................................................................10

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Place..................................................................................................................................11
Promotion..........................................................................................................................11
4 C’s......................................................................................................................................11
Consumer Value...............................................................................................................11
Cost...................................................................................................................................11
Convenience......................................................................................................................12
Communication.................................................................................................................12
Market Segmentation...............................................................................................................12
Service Element.......................................................................................................................13
Experiential Marketing; Customer Relations and Experience Management...........................13
Experimental Marketing.......................................................................................................13
Customer Relations..............................................................................................................14
Experience Management......................................................................................................14
Role of IT.................................................................................................................................14
Pricing and Cost Structure.......................................................................................................15
Pricing...................................................................................................................................15
Cost structure........................................................................................................................15
Stakeholders, Triple Bottom Line and Sustainability..............................................................16
Stakeholders.........................................................................................................................16
Triple Bottom Line...............................................................................................................16
Sustainability........................................................................................................................17
Conclusion................................................................................................................................18
References................................................................................................................................19

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Introduction
Pepsi Co. is multinational organisation, which has its presence in numerous countries across
the world. Overall aim of the essay is to address various concepts of marketing in the context
of one of the leading food and beverage giants Pepsi Co. This essay on the Pepsi Co. starts
with the brief overview of the company background. Further in this essay will discuss how
generic strategies given by Michael Porter are being used by the food and beverage giant.
Differentiation and competitive advantage is achieved by the company with the adoption of
cost leadership and differentiation strategy. Distribution channels of the multinational are also
strong, which is also providing strategic advantage to the company over its competitors.
Pepsi Co focuses on reducing the commoditization of its products by providing consumers
with the products as per their requirements. Therefore Pepsi Co is providing wide range of
portfolio to its consumers in the market. Company is also aware that it needs to do branding
and position its products as beverage that is made for young people. Company is also
successful in maintaining the brand image. It allows top level managers to take lead and be
innovative. Whereas in the area of marketing as well Pepsi Co is creative and also spends
huge amount for it.
Analysis of the 4 P’s and 4 C’s has also been done in this essay. Pepsi Co in order to remain
competitive in the market is providing its consumers with extensive product portfolio and
have been priced competitively. Company pays special attention in the areas of distribution
and does extensive marketing of the products. Pepsi Co is catering to different types of
consumers consisting of youth, people from all educational and occupational backgrounds to
health conscious consumers.
Pepsi Co is following latest trends in marketing in order to amaze people and make them
remember the brand with their creativeness. All the products and marketing strategies are

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aimed at the consumers. Company is not only following latest trends in the area of marketing
only but it is also involved in application and usage of latest technology in other areas such as
packaging of the beverages. Pricing and cost structure of PepsiCo is fixed by the market
forces and also does competitive pricing. Consumers, local communities, employees,
investors and government are the major stakeholders of the company. PepsiCo is socially
responsible and therefore believes in the taking care of various needs of the society, economy
and environment and sustainability is also ingrained in the company’s value.

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Company Overview
PepsiCo was established in the year 1965 in North Carolina, USA. PepsiCo is a food and
beverage organisation, headquartered in New York. This food and beverage company have
around 22 brands which consist of products such as Doritos, Aquafina, Pepsi, Lays, 7Up,
Miranda etc. At present PepsiCo is the leader in the industry of convenient food, beverages
and snacks. Revenues of PepsiCo are around $40 billion annually, in which beverages
contributes around 50% of that revenue.
Mission
PepsiCo aims to be the superior FMCG Corporation, by providing the consumers with high
quality convenient foods, snacks and beverages (Pepsico.com. 2017).
Vision
PepsiCo vision is the creation of better future by enhancing each side of the business
consisting of environmental, economic and social aspects.
Philosophy
All the decisions and plans should be based on the organisation which is environmentally and
socially responsible.
Differentiation and Competitive Advantage
Michael Porter has given Generic Strategies through which the business organisations can
gain competitive advantage over the competitor in the market. Those three strategies are Cost
leadership, Differentiation and Focus Strategy. PepsiCo is utilising two strategies of these
Generic Strategies for achieving competitive advantage:

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Differentiation - Differentiation allows the business organisation to differentiate
their products from the competitors in the market. In order to achieve differentiation PepsiCo
utilises broad differentiation as the strategy in order to achieve competitive advantage over
the competitors in the market. Differentiation strategy allows the PepsiCo to attract more and
more consumers towards the different features of the products. One of the ways in which
PepsiCo is differentiating its products is by its packaging, which attracts the consumers on
the basis of value that it gives to the consumers. PepsiCo brand Lays are being marketed as
healthy snack, as the products have less amount of saturated fat, which differentiate it from
other substitute products in the market and provides competitive advantage to the company.
Cost Leadership – PepsiCo is also utilising low cost strategy, which is focused on
the reduction of cost, through which the company can enhance the financial performance
which will further enhance the competitiveness of the PepsiCo in the market. In order to
compete with Coca Cola, PepsiCo offers low prices to the consumers, due to the bulk
production which leads to economies of scale, and also decrease the operating costs of the
production facilities. Sometimes PepsiCo also provides the consumers with promotional
offers which have discounted prices (Fill, C., 2005).
Distribution channels – Besides the application of low cost leadership and
differentiation strategy, other factor that is contributing towards the competitive advantage of
the PepsiCo is distribution channels utilised by the company. PepsiCo provides free fridges,
and products at low prices to the restaurants for stocking up Pepsi and when consumers come
to eat both the restaurant and PepsiCo will be benefited by the sale. Besides this PepsiCo
owns fast food chains like Taco bell, KFC and Pizza Hut and there also they keep the
products, which provides high reach to the consumers and thus is competitive advantage for
the company.

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Commoditisation and Total Product and Solution Offering
Commoditization – In order to prevent the brands provided by the PepsiCo to be
prevented from being commoditized, the company is tries to give products which fulfil the
needs and requirement so of the consumers in the market. PepsiCo is also doing this by
providing food and beverages that are different form the other similar products available in
the market. The company is focused on promotion of its brand so that consumer becomes
aware of the products. Besides this PepsiCo also pays attention to the packaging of the
product which gives a unique appeal to the products in the eyes of consumers and thus
company utilises can and plastic bottles of different volumes to cater the needs of the market.
Total Product Offering – Total products offer by PepsiCo involves 47%
beverages and 57% foods items. Various products offered by the company are as follows:
Food
Brand Variations
Cheetos Cheetos Cheese Ball, Cheetos Cheese Puffs, Cheetos Krunchy, Cheetos
Tangy Loops (Pepsico.com. 2017).
Lays Lays Classic Salted, Lays American Style Crème and Onion, Lays Chile
Limon Flavour, Lays Hot and Sweet, Lays Barbeque Flavour
Quaker Oats Quaker Lemony Veggie, Quaker Classic Eliachi and Raisins, Quaker
Strawberry with apple, Quaker mild pepper
Uncle Chips Uncle Chips Spicy Treat, Uncle Chips Plain Salted, Uncle Chips Tomato
Twist
Beverages
Brand Variations
7 Up Lemony Bite, Revive

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Aquafina Aquafina
Duke’s Duke’s Lemonade, Duke’s Soda
Gatorade Gatorade Blue Bolt, Gatorade Lemon Flavour, Gatorade Orange Flavour
Miranda Miranda Orange Flavour
Pepsi Pepsi Original and Diet Pepsi
Slice Slice Alphonso Fruit Drink,
Tropicana Tropicana Apple, Tropicana Mixed Fruit, Tropicana Guava, Tropicana
Mango, Tropicana Orange, Tropicana Pomegranate, Tropicana Red
Grape (Pepsico.com. 2017).
Branding
Brand Positioning – PepsiCo have positioned its various brands of the beverages
like Miranda, Slice, and 7Up, as sugary and sweet which suit the needs of the young
generation. This is how PepsiCo differentiated itself from one of the major competitor in the
market.
Consistency – PepsiCo have managed to maintain its image of a brand that provides
refreshing soft drinks for young people (World Finance. 2017).
Product Portfolio – All the brands of Pepsi cater to the needs of various segments,
and do not eat up the sales of other brands of the company. This gives Pepsi wider market
coverage due to its diversified products.
Inside Branding – PepsiCo provides the brand manager the freedom to use
innovative ideas in order to capture the interest of the consumers.

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Sustainable Marketing – Marketing team of Pepsi is really creative, when it is
about determination of marketing strategy for the various products of the company. Expenses
related to marketing are quite high.
Monitoring Programs – The Company have various monitoring programs such
as intermittent brand audit, regular tracking of sales, monitoring of performance of brands.
Value of the brand has been assessed around $12,800 million.
Benefits desired by the consumers – PepsiCo remained successful in
capturing of interest of young consumers. Company have also come out and have catered to
various consumer segments like introduction of Diet Pepsi in order to cater to the needs of
health conscious consumers (Kish, P., et.al., 2001).
Pricing – On the basis of perception of the consumers regarding value in the market, the
company have even entered in the price war with another soft drink manufacturer Coca Cola,
in order to maintain the brand equity.
Wide range of marketing activities – Brand elements of PepsiCo are
quite distinctive and awareness of the products of the company is high. Pepsi have
widespread channels of distribution. Promotional campaigns of the company also utilises
social media like Twitter Facebook etc.

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4 Ps and Cs
Figure 1: 4P’s and 4C’s of Marketing
4P’s consists of product, price place and promotion; these are from the point of view of
organisation. Whereas 4C’s are Customer value, cost, convenience and communication and
these are from the viewpoint of the consumers. 4P’s and 4C’s of PepsiCo are as follows:
Marketing Mix
Product – PepsiCo consists of beverages as well food items in its product portfolio. In the
beverages the major brands of the Pepsi are Tropicana, Pepsi, 7 Up, Miranda, Dukes, Slice,
Mountain Dew, Gatorade and Aquafina. Whereas food items consist of Cheetos, Lays, Uncle
Chips, Quaker oats. Unlike its major competitor Coca Cola, which have presence only in
beverages and thus cater to diverse consumers (Fill, C., 2005).
Price – Pricing done by the PepsiCo is competitive. If both soft drink giants Coca Cola and
PepsiCo have to enter price war none of the brands will win, due to the high transportation
and manufacturing cost. Although Pepsi gives discounts on purchase of large volumes, as the
size of the container increases the amount of discount also increases. This discount is also
there for distributors as well, who are given discounts on the basis of quantity and terms of
payment.

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Place – Products of the PepsiCo are sold at various general stores, big retail chains,
restaurants, convenience stores and retailers as well. The critical challenge that the company
face in the distribution is cost related to bottling and transportation. PepsiCo either gives the
products to its distributors who then forward the products to restaurants, convenience stores
and retailers or the company distribute directly via the company to the buyers who will
purchase in bulk.
Promotion – One of the major reasons of the brand image of PepsiCo is the extensive
promotions done by the company. Company mainly targets the young generation by having
brand ambassadors who are sportsmen or celebrities. PepsiCo utilises all the channels of
promotion, TV Commercials, Print Media, Billboards, social media as well. Packaging and
discounts are bundled together in order to provide value to the consumers and further
enhancing the brand image of the company (Weinberg, B.D. and Pehlivan, E., 2011).
4 C’s
Consumer Value – The product portfolio of PepsiCo is diverse and caters to the needs of the
various types of consumers. In the beginning the company manufactured those products and
created brands which will attract young consumers and teenagers. Later company introduced
Gatorade for health conscious consumers. Slice for consumers who do not like to have
carbonated drinks and various food items and snacks which also cater to wide range of
consumers such as Cheetos, Lays, and Quaker Oats.
Cost – Cost equals pricing in the conventional marketing mix. The price should be set
according to the point of view of consumers, in order to make the pricing effective and
competitive. PepsiCo set prices on the basis of volumes that a consumer buys. Company is
already providing the consumer with discounts on the basis of quantity, which give value to
the consumers. PepsiCo tries to charge minimum possible price, in order to attract more and
more consumers.

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Convenience – Like place in the conventional marketing mix, convenience relates to the
accessibility of the products to the consumer in the market. All the products of the PepsiCo
are available in general stores, restaurants, retail chains and convenience stores as well. Thus
PepsiCo takes due care of the convenience of the consumers in order to increase the sales and
maintenance of the brand image of the company. The company have extensive distribution
channel, so that the products are made accessible to the consumers
Communication – PepsiCo spends large amounts of money in order to communicate about
the brands of the company in the market. Company aims to promote the products of the
company via aggressive advertising, on print media, TV, and also over internet. Creating the
brand awareness is the major concern of the company in order to maintain the brand image of
the company.
Market Segmentation
Concept of market segmentation has been understood by the company in the early years of its
establishment. PepsiCo target the segments which have been untapped and thus gained
opportunity for growth. At present PepsiCo is targeting the young consumers usually
teenagers. The main idea of PepsiCo behind targeting the young generation is to lock them
for life with the products of the company. Company have recognised that there products
portfolio will be continuously purchased by the consumers even when they will get older, so
the company is trying to build wide and strong base of consumers, by targeting people in the
range of 14 years to 30 years. Pepsi markets its products to all the types of social,
occupational and educational backgrounds. The company targets all the geographical
segments of the regions including rural and urban areas of the target market, and this is how
the company is able to make its products accessible to the consumers. Besides this the
company targets consumers of all the social classes (Hassan, S.S. and Katsanis, L.P., 1994).

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PepsiCo have utilised multi segment positioning, under which the company is targeting more
than one segment by providing various types of products to this consumers. For example the
soft drinks of the company consist of high sugar and are not well suited for the people with
heath concerns. Therefore Diet Pepsi was introduced in order to cater to the needs of the
consumers who are health conscious.
Service Element
PepsiCo is basically providing the consumers with tangible goods, which consists of
beverages, snacks and other food items. Although the company is providing distribution
services, which are managed by the effectively and which enhances the availability of the
products of the company in the market. Besides this the company have special customer care
executives, in order to take care of any grievances and complaints on the part of the
consumers.
Experiential Marketing; Customer Relations and Experience
Management
Experimental Marketing – PepsiCo have produced fantastic experiences for
the people travelling in London, by the use of augmented reality and vibrant imagination
random people amidst the public witnessed incredible sights. As the part of “Unbelievable
Campaign” PepsiCo utilised the concept of augmented reality in order to create visuals like
tentacles coming out of the sewers to a tiger coming towards the bus shelter
(Marketingsociety.com. 2017).
The side of the bus stop was made of digital screen and with the addition of animations to the
surroundings. This type of marketing is totally new and shows the great potential of the
emerging technology to engage the potential customers via brand experience. In other part of
the unbelievable campaign, PepsiCo cheered the people for sending 6 second Vine videos of

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the unbelievable things that people have done by the usage of hash tag #Livefornow. This
campaign was reported widely because of the creative involvement of the customers.
Customer Relations – PepsiCo success is due to its customers. Consumers equal
the value given by the products of the company. PepsiCo believes in friendly alliances with
the consumers, in order to build trust and long lasting relations with the consumers. The
Customer Relationship Campaign of PepsiCo asks the consumers to recommend ways by
which the company can take part in the social foundations. PepsiCo have always represented
itself about the youth. At present young generation worldwide is overwhelmed by the social
media and are also involved in the sustainability, thus the organisation also wants to be all
about the target audiences. Marketing programs, products and merchandise is aimed at the
fulfilment of the needs of the consumers (Forbes.com. 2017).
Experience Management – PepsiCo grooms its top talent for the leadership
roles in the organisation in the future. The company aims at structure of critical experience, in
order to develop the leaders. This step calls the organisation to step away from conventional
hierarchy based organisation. Moreover, in order to infuse the employees with functional and
leadership skills, talent broadening is required by the addition of immersive capabilities in the
resume. Immersive capabilities are necessary in today changing environment which consists
of life skills besides appropriate training.
Role of IT
PepsiCo is focused on the innovative packaging technologies. Company have also filed
patent for creation of paper bottles. Though the concept is not new, but the company method
of creation of paper bottle is different. Carbonated drinks might prove problematic for paper
bottles, but drinks like Gatorade, Tropicana, and Slice are all potential applications of the
paper bottles. This will encourage the other market players to reduce the plastic waste and
recycle products. Another application of the packaging patents of the company claims to

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make the drinks more aromatic and make them smell natural instead of aluminium or plastic
like. The company have not been so open in the usage of technologies but have recognised
the importance of innovation and technologies in order to remain competitive in the market.
Therefore in order to make it possible the company have also opened up the VP level
position, due to the significance of PepsiCo’s commitment to innovation and changes in the
demand of the consumers in the food and beverage industry internationally (Bogost, I. 2017).
Pricing and Cost Structure
Pricing - Pricing of PepsiCo is based upon the consumer’s opinion of value and the
prices of the soft drink are determined by the market forces. Besides this the company does
competitive pricing, while offering a product which tastes better than he products of the
competitors in the market. PepsiCo works very hard to manage the prices at the current level
by the reduction of operating costs and adaptation of the processes (McKelvey, S.M., 2006).
Cost structure – PepsiCo’s production department identify the costs by categorising
them on the basis of behaviour and then assign them to various production units. Costs are
assembled as variable or fixed and then are assigned to the production department. PepsiCo
employs Activity Based Costing (ABC) for allocating different costs by the identification of
lone cost driver. Various activities have various rates of utilisation of resources and as a result
lead to different level of overheads. This method is applied by PepsiCo in order to access
improvements in the cost management. Cost is reduced by the company by assigning more
resources to the activities which have fewer overheads to those activities which have high
overheads, which further avoid the use of wastage of resources.

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Stakeholders, Triple Bottom Line and Sustainability
Stakeholders – PepsiCo CSR strategies are sustained on the basis of impact of the
stakeholders on the business. Prioritisation of the consumers is done according to the purpose
and beliefs of company, which is as follows:
Consumers – Customers of the company are the top priority stakeholders as the financial
position and stability of the company is based upon the fulfilment of needs and requirements
of the consumers.
Communities – Second priority is given to the society and communities in which the
company is operating, as the communities are critical stakeholders and have influence on the
customers and employees opinion about the company (Snider, J., Hill, R.P. and Martin, D.,
2003).
Employees – According to PepsiCo the employees of the company are significant for the
growth of the company in the long run. Thus company also take care of the career
development needs of the employees with its Talent Sustainability policy.
Investors – Investors are concerned about the financial performance of the company. By
focusing on the consumers, employees and communities the company is able to perfume well
and thereby catering to the needs of the investors as well.
Government – Government is concerned that the business organisations follows and
complies with the rules and regulations. PepsiCo always take care that the company complies
with all the rules and regulations.
Triple Bottom Line

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Figure 2: Triple Bottom Line
PepsiCo believes in the growth and expansion of its business activities by taking care of the
environment, society and economy where it operates.
Environment – PepsiCo is protects the environment by creative and efficient utilisation of
water, energy, land and packaging. Latest innovation of PepsiCo is the bottle made up of
plant material (Harris, J.L., et.al., 2011).
Society – In order to decrease the effect of the business operations, PepsiCo works by 5 R’s
which are recycle, reuse, usage of renewable resources, removal of material which is
environmentally sensitive and reuse of packaging.
Economy – The Company have expanded in the market in order to meet the demand. With
the changes in the economy PepsiCo also changes. Tropicana have merged with the company
and Quaker oats have also merged with the company.
Sustainability – Sustainability is ingrained in the company. PepsiCo have controlled
the greenhouse emissions despite of increase in the volumes of production. The energy
efficiency of the company has also increased by 16% and the company have decreased the
usage of water per unit, which have led to cost savings to the company of $17 million.

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Conclusion
After the analysis of the different marketing concepts in the context of PepsiCo, it can be said
that company is gaining competitive advantage with the application cost leadership and
differentiation strategy and the distribution channels of the company are also robust, further
adding to the competitive advantage. Company offers large number of products which helps
the company in order to decrease the commoditization of its products in the market. PepsiCo
also take due care how to position its products in the market. 4 P’s and C’s of the company
are also good enough as the company is providing numerous products in the competitive
prices.
Besides distribution and marketing of the products is also creative and efficient. PepsiCo
have segmented market on the basis of age, and is targeting youngsters, so that in the future
as well they will have significant amount of consumers. Company is utilising latest concepts
such as experiential marketing for the promotion of the brand. Use of latest technology is
being done in order to make more efficient packaging for the beverages. Moreover the
company also takes due care of various stakeholders like consumers, employees, community
and environment, which helps the company to take care of environment, society and
economy as well.

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References
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2017].
Bogost, I. (2017). Pepsi's New Ad Is a Total Success. [online] The Atlantic. Available at:
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